March 6, 2020
Simon & Schuster is “not a core asset” says CEO as publishing giant is put up for sale
by Nikki Griffiths
The “Big Five” publishers dominate the US book market. Together, Penguin Random House, HarperCollins, Simon & Schuster, Hachette, and Macmillan total over 80% of the trade publishing market. Now it seems Five is about to become Four.
During a conference on Wednesday 4th March, Bob Bakish, Chief Executive of ViacomCBS Inc, the company that owns Simon & Schuster, made a statement saying they are looking to sell the book-publishing business, stating Simon & Schuster “is not a core asset. It is not video-based. It does not have significant connection for our broader business.”
Ouch. That is hard to hear about a publisher whose authors include legends like Stephen King, Ursula K. Le Guin, and F. Scott Fitzgerald. Those of us who dedicate our careers to bringing literature into the world do find our work significant thank you Mr Bakish. After the announcement, Simon & Schuster president and CEO Carolyn Reidy sent a letter of reassurance to staff, saying:
Whatever the outcome, this process does not change what we know to be true of Simon & Schuster … We are a great publishing house and one of the world’s best known publishing brands, with an incredible legacy and bright future. We have a tremendous track record of producing best sellers in every category and format, and for readers of every age. We have a history of strong and long lasting relationships with our authors, and we will continue to bring important voices to readers around the world, both with our current publishing and our rich backlist of perennially favorite titles.
Strong words: we know how hard our fellow publishing professionals work, often for love not money! But as and when a sale occurs, undoubtedly jobs will be lost, just as they were when Penguin and Random House joined forces and Waterstones was bought up.
Let’s take a trip down consolidatory lane to understand who could be in the running to snap up S&S.
Number one seems to be News Corp, owned by media mongrel … oh excuse me, I mean mogul, Rupert Murdoch, whose portfolio includes HarperCollins. Back in 2012, The Wall Street Journal reported News Corp had expressed interest in the acquisition, and in 2014 HarperCollins expanded by acquiring Harlequin Enterprises.
A likely candidate could be Bertelsmann, who are shortly to become the sole owner of the world’s biggest trade publishing group, Penguin Random House. They bought the remaining 25% stake in the company from Pearson for $675 million. And of course in 2013 Penguin Random House was formed in a £2.4 billion transaction between Bertelsmann and Pearson. They seem to like consolidating, and PRH bought a 45% stake in independent publisher Sourcebooks last year.
We also have to consider French company Lagardère Publishing, which owns Hachette Livre. Over the last few years Hachette has bought up Hyperion from Walt Disney Co. and the Perseus Books Group.
And let’s not forget the power of Amazon, who are publishers in their own right with 16 imprints and 21 physical bookstores in the US. The threat of Amazon is arguably what is driving publishers to band together and consolidate against them. As Dan Sabbagh wrote for the Guardian back in the early days of the PRH merger:
With Amazon dominating 90% of the ebook market, publishers believe they need sheer size to maintain their position in a business where technology and commercial relationships are changing fast.
At all costs, we do not want Amazon to be acquiring an established publishing legacy.
The book game might not be a shiny enough prize for Bakish, but it is far from doom and gloom. Print sales are a little up and down but reasonably stable overall. According to NPD BookScan, as reported in The Wall Street Journal, since 2015 sales have increased by 5% although 2019 was not the best year, experiencing a decline of 1% in the number of print books sold to 689.4 millions. Audiobooks are bucking the trend, increasing in value by 24% in 2019.
ViacomCBS itself has just had a bad year. After merging with CBS last year, the company’s revenue was reported to have fallen by 3% on the previous year to $6.87 billion and they suffered a fourth-quarter net loss of $258 million. Simon & Schuster also did not have a great year. Publisher’s Weekly report that revenue fell 1% to $825 million after a particularly bad fourth quarter, with earnings falling 29% compared to the same period in 2018. It is estimated that Simon & Schuster should sell for more than $1.2 billion so it seems Bakish just doesn’t want to ride the gentle waves of publishing and cut all ties.
Mergers and buy-outs are not just confined to publishers. We have watched over the last couple of years as Elliott Advisors bought Waterstones in the UK, Waterstones bought indie bookshop chain Foyles, and Elliot bought Barnes & Noble, meaning book buying decisions becoming centralised and more cautious. In this growing world of conglomerates, where publishers and bookstores are owned by media and financial giants, dear reader, do spare a thought for small but brave independent publishers. We fight the good fight to get our books noticed in a sea of homogeny and cronyism, often discovering the talent of tomorrow before the bigger companies swoop in and reap the rewards. Another merger will only make things harder for the little man. And God forbid Amazon get a look-in. When you can, do support your local, independent bookshops and independent publishers. We need you.
Nikki Griffiths is the managing director of Melville House UK.